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Issues Involved:
1. Rate of interest agreed upon. 2. Validity of the sales of the pledged shares. Detailed Analysis: 1. Rate of Interest Agreed Upon: The primary issue was determining the agreed rate of interest between the parties. Initially, the rate was 3 1/2 per cent, which was reduced to 3 per cent from 1-12-1944. The defendant Bank claimed that the rate was raised back to 3 1/2 per cent from 17-10-1946 through a cyclostyled circular (Ex. 9). The plaintiff contested this, arguing that the circular did not constitute a proposal, was not proven to have reached him, and that there was no implied acceptance. The court considered whether the defendant could argue an implied agreement at the appellate stage, concluding that the plaintiff had adequate notice of this alternative case. The court found that the circular implied a proposal that the plaintiff accepted by continuing to operate the overdraft account and taking further advances, thus agreeing to the higher rate of interest. The evidence showed that the plaintiff was aware of the increased rate and did not object to it when his accounts were audited or when he signed confirmation slips. The court concluded that there was an implied promise to pay interest at the rate of 3 1/2 per cent from 17-10-1946. 2. Validity of the Sales of the Pledged Shares: The plaintiff challenged the validity of the sales on two grounds: (a) the Bank had no right to sell the shares on the dates the sales were held, and (b) the sales were held without proper notice. The court focused on the second ground. The court examined whether the notices given by the Bank complied with Section 176 of the Indian Contract Act, which requires a "reasonable notice of the sale." The court found that the notices given by the Bank, particularly the letter dated 12-5-1949, were adequate as they indicated the Bank's intention to sell the shares if the plaintiff did not restore the margin. However, the court held that the sales held before 20-5-1949 were premature and thus invalid. For the sales held in 1950, the court found that no fresh notice was given after the 1949 sales, which was necessary due to the significant changes in the plaintiff's liabilities and the new arrangements made between the parties. Consequently, these sales were declared invalid. Regarding the sale held on 20-2-1951, the court noted that it was conducted with undue haste and without proper notice to the plaintiff, who had expressed his intention to redeem the shares. The court also found that shares pledged after 12-5-1949 could not be covered by the earlier notice. Therefore, the sale on 20-2-1951 was also declared invalid. Conclusion: The appeal was allowed in part. The court affirmed the order that the plaintiff was liable to pay interest at the rate of 3 1/2 per cent but modified the order relating to the validity of the sales: - Sales held prior to 20-5-1949 were declared invalid. - Sales held on and after 20-5-1949 in 1949 were confirmed. - Sales held in 1950 were declared invalid. - The sale held on 20-2-1951 was declared invalid. Each party was ordered to bear their own costs before the Special Referee and the lower court, with the appellant entitled to half the costs of the paper book and the hearing fee in the appeal.
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